What happens to an estate if the deceased was in Chapter 13?

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What happens to an estate if the deceased was in Chapter 13?

My mother died while in Chapter 13 bankruptcy. What happens with the bankruptcy? Do the heirs lose property left to them if it was included in the bankruptcy? Will the bankruptcy take the insurance money?

Asked on November 14, 2011 under Bankruptcy Law, Tennessee

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

I am so sorry for your loss and for the situation that has resulted.  It is my understanding that the bankruptcy law says the chapter 13 case could be dismissed when a debtor dies or it can be continued by an interested party - which would be the personal representative of her estate -  or it can be converted to a chapter 7 case. Dismissal is most common.  But you have to consider what will be of her assets here.  How is the property held?  Was it left to you in a Will or did it pass by operation of law when she passed away?  What you have t consider is will the creditors make a claim against the estate proceeding for the outstanding plan payments.  You can try and see if the creditors will allow you a hardship discharge.  Good luck to you.


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